Mortgage Forgiveness Debt Relief Act Future?

NEW YORK (CNNMoney) — The clock is ticking on a taxbreak that saves struggling homeowners from paying thousands of dollars to the IRS.

If the Mortgage Forgiveness Debt Relief Act of 2007 does not get extended by Congress by the end of the year, homeowners will have to start paying income taxes on the portion of their mortgage that is forgiven in a foreclosure, short sale or principal reduction.

So if you owe $150,000 on your home and it sells for $100,000 in a foreclosure auction, the IRS could tax you on the remaining $50,000. For someone in the 25% tax bracket, that would mean paying $12,500 in taxes on the foreclosure.  Similar taxes would apply for forgiven amounts in short sales and principal reductions.

“People trying to do short sales are freaked out about it,” said Elizabeth Weintraub, a real estate agent in Sacramento, Calif. “They’re telling me they’ll do whatever it takes to close by the end of the year.”

Should the tax break expire, a large number of mortgage borrowers could be affected. More than 50,000 homeowners go through foreclosure each month.Meanwhile, the number of short saleshas tripled over the past three years to a rate of about half a million a year.And, under the terms of the $25 billion foreclosure abuse settlement, roughly one million borrowers may have their mortgage debt lowered through principal reductions over the next couple of years.

“If there ever was a no-brainer in housing policy, this would be it,” said Jaret Seiberg, a policy analyst for Guggenheim Securities.

Yet, Seiberg is skeptical the exemption will get extended. Now that the election is over, he thinks Congress will be heading into a “lame duck” session, with very little legislation moving forward through the end of the year.

In addition, the cost of the exemption could make it a point of contention, he said. The office of Sen. Max Baucus, who heads the finance committee, estimated the cost of a one-year extension at $1.3 billion.

Others disagree. Tom Kolpien, the press secretary forRep. Tom Reed of New York, said Congress will likely act before the end of the year. (Reed is currently pushing for the extension on the House Ways and Means Committee).

“Both parties, both houses of Congress agree it’s good policy and it needs to get done,” said Jamie Gregory, chief lobbyist for the National Association of Realtors, which supports an extension. “The hold up is the process. I’m confident it will get done. I just don’t know how.”

Even if Congress allowed the exemption to expire, not all borrowers withforgiven mortgage debt will take a tax hit. If the debt is discharged in a bankruptcy, no tax is due. And anyone who is insolvent — meaning they have more debt than assets — at the time the debt was forgiven — would not have to pay the tax.

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Real Estate Prices on the Rise

For local information about the Destin, Santa Rosa Beach, Niceville, and Crestview areas, contact me at MykeSaysSold@aol.com  850-305-6256

For Sale By Owner–I can do it myself and save lots of money!

The house has to be immaculate inside and out,

Potential buyers are beating on your door and calling the number you posted out in the yard

The legal and financial details of the home sale process loom.

Don’t be tempted to handle this situation by yourself; instead, make your life infinitely easier and use a Realtor to help you sell
your home.

The lure of saving money is a strong one.

Most Realtors charge between 6 to 7% on commission. As the seller, this comes out of your proceeds
at closing. I know you’re thinking that there’s no way that using a Realtor is worth anywhere near this much money.

However, it truly is worth every penny; here are the top reasons why you should use a Realtor when selling your home.

1. The Security of Your Family and Home

You cannot put a value on the security of your family and home. You
want your family to be safe in your home without having to worry. But remember
when I mentioned the hoards of potential buyers for your home? If you sell your
home yourself, you have to meet with each one of these buyers by yourself. The
problem is you never know who these people really are. It’s horrific to
consider, but it has happened where people have gone to a home on the premise of
looking to purchase it and instead have committed a crime.

The realtor, with the use of an electronic lockbox, knows exactly who was in the house AND when!  Realtors also get to know their clients, so there are not strangers casing your home.

When you use a Realtor, you don’t have to meet with the potential buyers and expose yourself and your family to possible harm. Instead, each person that enters your home is accompanied by a licensed Realtor.
Because the person is in your home with a Realtor, you and your family don’t need to be there. This mitigates the risk of someone harming you while in your home.

The chance of someone committing a crime against your property, either through theft or vandalism, is drastically reduced by their Realtor being
present.

2. The Value of Your Time

Let’s consider the hassle of dealing with potential buyers. When you sell your home yourself, you’re the sole contact with potential buyers.
If someone wants information, they contact you. This means your phone can be ringing constantly.  You can’t just ignore these calls; if you do, your house will take even longer to sell.

Remember the part about keeping your house immaculate? When you sell your home yourself, this has to be true 100% of the time.

People can and will pull up outside your home and demand to look inside at any time of the day or night. If you ask them to come back at
a more convenient time, you could easily lose a sale.

By using a Realtor, your time is reaffirmed to be as valuable as I know that it is.  A Realtor handles all the phone calls, and is
specially trained in how to answer these calls professionally without compromising the sale of your home. Your Realtor coordinates the showings
with other Realtors, leaving you with specific times for the showings. This will allow you to relax and enjoy the time you have remaining in your home.

3.  The Value of Peace of Mind for the Future

Selling a home is a complicated legal and financial prospect. Sure, you can buy generic forms to fill out for the Purchase Agreement and everything else.   But what assurance do you have that they’re filled out in a way that protects you for the future? After all, you certainly don’t want to deal with a lawsuit five years from now with your buyer saying that you made an error in the paperwork on the transaction.

When you hire a Realtor, they shoulder this burden. Realtors are required to carry what’s known as Errors & Omissions insurance. This
insurance protects you from such little errors. If there’s a problem, the insurance company is who works to resolve the situation, not you.

So don’t succumb to the lure of saving the commission money.

Hiring a Realtor is the absolute best thing you can do as you prepare to sell your home

Help for Short Sale Process

The legislation, also known as the Prompt Notification of Short Sale Act, will require a written response from a lender no later than 75 days after receipt of the written request from the buyer.

The lender’s response to the buyer must specify acceptance, rejection, a counter offer, need for extension, and an estimation for when a decision will be reached. The servicer

will be limited to one extension of no more than 21 days.

The bill will also allow the buyer to be awarded $1000, plus “reasonable” attorney fees if the Act is violated.

According to a release from Short Sale New England, short sale homes do not bring down neighboring home values like foreclosed homes do, and 83 percent of short sale buyers are satisfied with their purchase, according to a 2012 Home Ownership Satisfaction Survey conducted by HomeGain.

“The current short sale process can be time consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a homeowner from foreclosure,” said Moe Veissi, president of the National Association of Realtors. “As the leading advocate for homeownership, realtors are supportive of any effort to improve the process for approving short sales.”

Equi-Trax released a survey last year on the issues real estate agents face when completing short sales. Guy Taylor, CEO at Equi-Trax, said 71.9 percent of respondents reported that a short sale can take four to nine months to complete, and they think that is simply too long.”

The survey also found that 18.2 percent of deals require less than three months to complete, with 10 percent requiring more than 10 months.

When agents in the survey were asked to how the short sale process can be improved, 57.6 percent said lenders should take less time to close transactions, 14 percent said borrowers should be better educated about short sales, and 40.4 percent said both of these changes are necessary to improve the process.

In April 2011, a similar bill was introduced by Reps. Tom Rooney (R-Florida) and Robert Andrews (D-New Jersey), but this version requested a response deadline of 45 days instead of 75 from lenders. The legislation never came up for debate before a House committee.